WASHINGTON (Bloomberg) - Oil is headed for its biggest five-day rally in six years as Saudi Arabia and its allies started bombing targets in Yemen. Asian shares dropped the most in eight weeks, led by technology companies after the Nasdaq Composite Index tumbled in the US.
US oil jumped 4.9 per cent by 11.39am in Tokyo, taking its gain since March 19 to almost 18 per cent, the most since February 2009, while Brent approached US$60 a barrel.
The MSCI Asia Pacific Index sank 1 per cent as Taiwan Semiconductor Manufacturing Co tumbled. Japan's Topix gauge fell the most since Jan 6, while US index futures were little changed. The US dollar gained 0.3 per cent versus the New Zealand and Malaysian currencies.
Saudi Arabia's bombing of Shi'ite rebels in Yemen marks an escalation in tensions with Iran, which the world's largest oil exporter blames for fomenting trouble in its southern neighbour. Technology shares drove a 1.5 per cent slump in the Standard & Poor's 500 Index Wednesday as investors sold 2015's best-performing equities. German consumer confidence and UK retail sales reports are due, while investors await US jobless claims data after an unexpected drop in durable goods orders.
"The market is taking a view that some risk premium is warranted," Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. "Yemen is not an oil producer of great significance but it is located geographically and politically in a very important part of the Middle East."
West Texas Intermediate crude futures traded at US$51.55, the highest intraday price since Feb 18. Brent gained 5.6 per cent to US$59.60 in London.
King Salman ordered the airstrikes against Shi'ite Houthi positions after an "appeal" from Yemen's President Abdurabuh Mansur Hadi, Saudi Ambassador Adel al-Jubair said in Washington. Prices slid earlier on Thursday after a US government report showed crude inventories and production swelling further last week to the most in more than three decades.
Japan's Topix index fell 1.7 per cent. The Kospi index slipped 0.6 per cent in Seoul. Taiwan's Taiex index sank 0.9 per cent, as TSMC tumbled 3 per cent. Semiconductor makers comprise 23 per cent of the Taiex, the biggest grouping, according to data compiled by Bloomberg.
In Hong Kong, AAC Technologies plunged 7.7 per cent, the biggest retreat in the Hang Seng Composite Index. The Hang Seng Index gained 0.2 per cent and a gauge of Chinese shares in the city was little changed.
The Shanghai Composite Index advanced 0.8 per cent after snapping its longest winning streak in almost 23 years on Wednesday.
Technology shares in the S&P 500 slid 2.7 per cent to lead losses among nine of the 10 main groups in the gauge. Advanced Micro Devices Inc and Nvidia Corp plunged at least 5 per cent after analysts said a slowdown in demand for desktop computers may hurt sales. The Philadelphia Semiconductor Index fell 4.6 per cent for its biggest drop in five months.
Stocks are entering a stretch of the year when companies customarily suspend share repurchases before reporting quarterly results, according to Goldman Sachs Computer and software makers repurchased more shares than any other industry in 2014 at US$122 billion, according to data compiled by Barclays.